Monopolies stifle economic growth and innovation. They extract profits way beyond what they can if the market is competitive (*that* is why MSoft is so profitable, not because they provide a good product.) And that is why it only makes sense for IBM to fight them.
In the software market, MSoft is going to try to swallow your niche if it is at all profitable. As the monopolist, it is pretty easy for them to do so -- and the toothless attempts at reining them in have shown us that they can treat regulation as a minor cost of ongoing business. As a monopoly, they can just pass those costs on to customers, without hurting their profits or market share.
If your primary business is software, you have to try to undermine MSoft -- there really is no place to grow your business to a large size otherwise. So of course IBM has to try to undermine MSoft, as does Oracle and any other software maker that wants to grow to any substantial size. And if you are small, you have to do it in subtle ways, so that MSoft does not notice and squish you like a bug.
With no monopoly on the OS and no monopoly on the hardware, it's going to be hard for IBM to lock in a new monopoly.
The modern nation state is not a bad analogy either
The proper analogy is to the modern non-democratic nation-state, which was first overthrown in 1776. Now authoritarian power is vested in the corporation. Given the "L'etat, c'est moi" attitude of most CEOs, I wouldn't be surprised to see yet another Reformation or Enlightenment-style overthrow of corrupt autocratic leaders in our lifetime.
If anyone needs to point to "harm to the consumers" because of monopoly power, here it is! The only reason MS can raise its prices to cover these costs is because it has a monopoly. The consumers are directly harmed by MS monopoly.
Fines are NOT a "cost of doing business", they are a punishment. MS is putting its customers in the way of the lash here. How is that "a cost of business", or anything but harm? Clearly, the only punishment that will affect MS is getting drawn and quartered (split up). Thank goodness it's not considered a cruel and unusual punishment for corporations!
A while ago, some internal Diebold memos were leaked showing that their practices were (to put it mildly) very shoddy. At least one generation of machines were horribly insecure, making it trivial to untracably stuff the ballot box.
They should never have been allowed to sell their machines after this came out.
Winning a court case should be pretty easy, given the problematic design of Diebold systems. They look as though they were designed to help vote fraud (though the reality is probably that they were designed to allow Diebold to cover up software problems).
The security holes were already being used, when they were exposed on the Internet (publication of internal Diebold memos). This made them available to everyone, and put pressure on Diebold to fix the problems....
It wasn't code, it was bad design. One that allowed the vote totals to be fudged in untraceable ways. Vote totals kept in MS Access databases without a password; audit logs that could be edited without leaving a trace; three sets of the vote totals, with different uses, so that one could edit the set that reported totals, without changing the set that gets shown for the detailed precinct report.
Inside A U.S. Election Vote Counting Program
Human error we're going to get no matter what, so we want a system that will minimize it. Not one that makes it difficult to spot.
Damaged punch cards are easy to see, bad optical scanners will get noticed. Problems with voting software in black-box voting systems are much harder to spot, if there's no paper trail to audit.
But the problems with Diebold systems are much worse than this. The vote counts are stored in a MS Access database, which can easily be edited by anyone who knows how. They are not necessarily protected with a password. Even worse, the audit log is also editable, so that it's possible to go into the system, alter the votes, and then edit the log to hide all traces.
Perhaps Diebold was keeping this backdoor in so that they could edit vote counts when their systems malfunctioned. However, others can also use the backdoor, and perhaps they have. There were some very squirrely results out of Georgia last election, where the pre-election polls were at wide variance with the results.
"2. Many unemployed and about-to-be-unemployed US engineers would be happy to work for less money (within reason)in order to keep their jobs, however when this is suggested to companies the companies usually choose to go with outsourcing. If an engineer is willing to take a 30 - 40% pay cut to save his/her job, why isn't this offer taken seriously by most companies?"
It's not enough, compared to the savings from outsourcing. Plus, the wage rate in the U.S. hasn't gone down 30-40% yet. Employee loyalty is a thing of the past, so the company probably figures (correctly) that the engineer will be jumping ship for a better salary eventually.
3. "What can American engineers do to lower their cost of living in order to try to compete with 3rd world salaries?"
Learn to live without the new SUV or BMW. Forget the half-million dollar home in Silicon Valley, and get a smallish apartment for $1,500 a month. Yea, your kids might have to share a bedroom, and your family might have to share one bathroom instead of two. But you're going to have to live more like someone with a Wal-Mart job than like a CEO.
4. "Any idea what the 'Next bit thing' will be and what do we do in the meantime?" I predict big growth in butlering and maid service, as well as the tutoring, nannying, gardening and chauffeuring professions. There will be significant demand for people in those professions, and it *can't* be outsourced.
More seriously, look for jobs that require a lot of capital to support them. Those, and jobs that require a lot of coordination between the producers and their markets. That's where the long-term U.S. growth will be.
"6. (related to 5) What if you'd much rather develop code than manage projects?" Get into an area where you're developing in close coordination with your customer. Projects that can be done with a waterfall-style approach are much more easily outsourced that those which require an iterative rapid-development approach. Look for projects that require a good understanding of the customer and the market.
7. "what do we do with the millions of US workers that would be put out of work in this scenario?" Long term, wage rates in the U.S. will drop and in the outsourcing countries will rise, and we will all be employed. Given the productivity gap between the U.S. and India/China, U.S. tech wages shouldn't have to drop 10-fold before offshoring is no longer attractive. In the short term, "let them eat cake". [Sorry, it's the only possible answer an offshoring advocate can give to this scenario. Expect them to sidestep it instead, and wave their arms about retraining.]
We need to help this adjustment along. Wages are sticky downwards, and that could produce a lot of unemployment. We need a bit of positive inflation, so that white-collar paychecks can erode in real value quickly rather than producing widespread unemployment.
"Oh, and if millions are unemployed, who is going to pay the taxes to support the schools that we supposedly need to train workers for the 'jobs of the future'?"
No one. First, there probably won't be millions of unemployed, merely a rapid erosion of white-collar pay rates. Corporations won't pay more taxes, they have already figured out how to shift and hide profits with transfer pricing. The wealthy have steeply reduced their share of the tax burden, and look to be able to keep it by exploiting the social divide between religious and not-so-religious Americans. And yes, that means our distribution of wealth is going to look much more like India than it does now. We're in for a long-term erosion of the middle class, until India catches up.
1) Heavily subsidize higher education and health care, like other countries do.
2) Encourage investment in domestic start-ups with tax breaks, while raising taxes on income earned abroad.
3) Crack down on transfer-pricing abuses by multinationals. Right now, transfer-pricing schemes are being used by many to evade taxes they used to pay. The ability to evade taxes through transfer pricing encourages companies to off-shore.
4) Pressure the governments of India and China to re-value their currencies. Part of the offshore pressure comes from their 'beggar-thy-neighbor' policy of pegging their exchange rates far too low. It won't hurt as much when trade in goods and services are in balance.
5) Lower the tax burden on those who are hurt (educated and uneducated workers) and raise it on those who benefit (the wealthy). Yes, this doesn't encourage onshoring, but it will help ensure that we'll all see the benefits of the free trade.
We can expect to remain at or near full employment. After all, wage rates will fall (in real terms) unti l full employment is reached.
That is what has happened to manufacturing workers: their real income has dropped over the last two decades, due to increased competition. Yes, there's still employment, but most of the decent middle-class jobs have been replaced with Wal-Mart struggle-to-survive jobs.
Sure, we'll have jobs. But they won't pay nearly as well as they used to. Do we really want that to happen to another large sector of the economy?
My off-the-cuff guess is that the U.S. has plenty of capital and farmland, and shortages (relative to India/China) of educated and uneducated workers. So the wealthy and farmers are going to benefit. Workers in high-capital industries will probably benefit, too.
Everyone else 'loses'. Given the gap between Indian/Chinese and U.S. wages and much narrower gap between Indian/Chinese and U.S. productivity, we are going to see downward pressure on salaries for a long, long time. Wages for mfg. wages have stagnated or dropped since NAFTA, and show no sign of rebounding.
Will this be different from NAFTA? Yes! Mexico is relatively small, population-wise. The educated population of India is comparable in size to the educated population of the U.S. The effects should be much more severe.
How is this different from offshoring to Ireland? Ireland is relatively small, and is a developed country. The wage and productivity gaps were much, much smaller than those between the U.S. and India/China.
Supporters of offshoring like to say that "everyone benefits" from the increase in economic efficienty. But the economic theory of trade doesn't say that, it says that overall the world benefits. There are important caveats:
1. The benefit does not have to be shared between the two (or more) countries involved, depending on circumstances.
So, who *is* benefiting from offshoring to India and China?
2. Within a country, the 'plentiful' factors of production usually benefit, but the 'scarce' ones see their share of the pie shrink. If the pie grows enough, the 'scarce' factors see a gain, but it is certainly not a given. [Scarce and plentiful are relative terms. A country can have a high proportion of educated workers, like the U.S., and still have a shortage compared to say, India or China.]
In the U.S., who is going to benefit (what factors are 'plentiful')? Who is going to -- relatively -- lose out? How badly are the 'losers' going to suffer? How large is this group going to be? Should we do anything to help them out?
Is the current situation different from what happened with manufacturing jobs going to Mexico under NAFTA? How, aside from it being white-collar work rather than manual labor?
Is the current situation -- free trade with India and China -- any different from the migration of jobs to 'low-cost' Ireland a few years ago? How?
Which is exactly what is happening. Industrial countries have (comparatively) a surplus of wealth, India/China a (comparative) surplus of educated and uneducated labor. Economic theory (trade theory in particular) predicts that:
1) The groups that supply something that is relatively scarce in a country will benefit less by free trade (perhaps hurt).
2) The groups supplying something plentiful will benefit.
3) Overall, the production per capita and per unit of input worldwide will increase. The only question is "Who will see the benefits of free trade?"
In the industrial countries, the wealthy will benefit, workers -- educated and otherwise -- will probably be hurt. The spread between haves and have-nots should increase, and the middle class will thin out. In India, the opposite should happen.
The difference between China/India and the industrial nations is large, and the populations involved are equally huge. India and China have been fairly isolated from the rest of the world for most of the last century, thanks to isolationist governments. Now, the floodgates are opening, at the same time that the Internet has built a 'railroad' for intellectual work. The cost to transport intellectual work has dropped tremendously, and a vast reservoir of severly underemployed educated workers has been added to the world economy. Wages for educated work are likely to drop severely in real terms over the next several years, in the industrial nations. We are only seeing the beginning - there is almost an order of magnitude spread between Indian/Chinese wage rates and Silicon Valley ones.
Further, wages and prices are 'sticky'; people are reluctant to work for a lower wage and companies are unwilling to cut prices. The economic adjustment to this sea change is going to be very painful unless industrial countries have an increase in inflation to help hide the drop in real wages. Yet in almost all the industrial nations, we are saddled with central banks who are adamant about preventing inflation (with the exception of Japan). This is going to be a bumpy ride....
Japan has been doing poorly because the central bank was utterly stupid, and pushed Japan into a Depression, complete with deflation and a liquidity trap.
It is only in the last year that the Japanese central bank has wised up, and started taking action to create a little inflation. Before this, the monetary policy was too restrictive, and undid all any pump-priming deficit spending that the government attempted.
Japan's prosperity or lack of it has nothing to do with being willing to work for miserable wages, and everything to do with mismanagement on the part of their government.
Indeed, it is a great wage-leveller. Unfortunately, the populations of India and China are so large that outsourcing will pull industrial-country wages down much further than it will raise Indian/Chinese wages, by the time the wage rates settle into equilibruim. Industrial countries wealth/income profiles will come to resemble those of India/China.
Who really benefits? India and China have a comparative advantage in both educated and uneducated labor. Industrial countries in general have a comparative advantage in industries that require a lot of capital. The US has an additional advantage in those that require land -- agriculture and resource extraction.
So in the US, farmers and the rich should benefit, and the rest of us should see our living standards decline (perhaps tremendously). The industrial countries are democracies; their citizens are unlikely to let a widespread erosion in living standards continue. I forsee a strong backlash against Free Trade developing, and strong limits to trade rising over the next decade.
Really, most of what we in the developed world spend money on is status symbols. The value in a Mercedes or a Rolex isn't in the actual car, it's in the status they provide. Why do people buy new cars? Status. Lights inside your case, to wow your friends at the LAN party? Status. A neatly mowed front lawn? Status. (Seriously! Read Thorstein Veblen's seminal _Theory of the Leisure Class_.) Martha Stewart housewares? Status.
The key to value and status is scarcity. Period. If something is useful, beautiful or cool, and scarce because it's programmed into the MMPORG, it's valuable. That scarcity value is no different than the scarcity value that comes from being stamped by a trademark (Rolex, Mercedes), artificial scarcity from a cartel (diamonds), or actual scarcity (land in Tokyo).
Outside of monopolies and cartels, what makes something scarce (and therefore valuable) is the time it takes to make or get. Stuff is valuable in MMPORGs because it takes time to get. This is no different than what makes some physical object valuable.
If you think about it, a deed or patent is just as virtual as that leet EQ weapon. There is no physical reality there, just ideas in peoples' heads (and laws to back them up, which are also virtual). The value is only in the usefulness and scarcity.
Which raises the question; How long until governments start trying to tax the online economies in MMPORGs?
Really, the general case is more like "Spend it on a Porsche, the Porsche CEO will pay their housemaids and gardeners. ". Though in Porsche's case, the workers are unionized, so they do get a fair wage and therefore a share of the wealth.
Wealth doesn't trickle down when management and owners skim it off. For example, a lot more wealth trickles down to workers in unionized grocery stores than in a Walmart.
The basic point is correct, however. Distribution is the key, and famines these days occur mainly because of disruption(e.g. war), or inefficiencies (e.g. monopolies and exploitation) in the distribution networks. Oddly enough, monopolies on food distribution don't survive long in democratic countries....
Many Americans own equities, but actual wealth is increasingly concentrated in the top couple of percent. The comparitively few equities that most Americans own are not likely to make up for the loss of wages they'll face from outsourcing.
It's much more likely that the real beneficiaries will be that top couple percent who hold the bulk of the wealth. And the half that doesn't hold equities will not benefit, they will be harmed.
Free trade benefits the 'factors of production' that are relatively plentiful: in the U.S., it's land and capital. Until recently, I would have said educated workers too, but the outsourcing craze shows that my uninformed gut feeling on that was incorrect. The shortages in India and China are land and capital.
If India and China were small or medium-sized countries like Mexico or the Philippines, I would not worry a whole lot -- the U.S. economy and population would be large enough to absorb the shocks from free trade without huge changes in living standards. But the populations of India and China are huge relative to America's, and their economies significant. It's entirely possible that when the dust settles, America ends up changing more than they do.
There are more jobs in America than there were four years ago. However, jobs have grown at the slowest rate since the Hoover administration (that's the Great Depression, for the history-challenged).
Exactly. I'm wondering how much SCO had to pay, and to whom, to get this guy in print.
The article is hardly an 'analysis', so much as an attempt to lay out the logic SCO wants businesses to see. ("Pay us, it's cheaper than getting sued later.")
There was no attempt to gauge the liklihood that SCO had any valid case, which is the key issue. Of course, how could he -- the author has no background in IP law. Any decent analysis of the risks has to take the relevant IP law into account. Otherwise, it's just uninformed noise.
How does it survive? It doesn't!
The work goes where there is a 'comparitive advantage', if the economic system is working correctly. Right now, India oddly enough has a 'comparative advantage' in educated work; its educated people have been severely under-employed compared to educated people in the U.S.. The reason things are shifting *now* is that the cost of transporting their work from one market to another has dropped immensely because of the internet.
On the other hand, the work of the uneducated is largely manual labor, and the transportation costs of moving that work between markets has changed a lot less. (Besides, the products of the manual work have been protected in the U.S. for most of the last century. The U.S. *still* has trade restrictions on textiles!)
A third thing is also going on -- the U.S. is being lent a lot of money from the rest of the world (esp. China and Japan). For this reason, the U.S. dollar is far, far higher than it should be. So you can adjust that cost-of-living figure somewhat for an overvalued dollar. Don't be surprised if, in a few years, the dollar has dropped so much that you see more like "$22,000 = a decent middle class life in India"
My wife *is* a lawyer (working in IP). She was reading this (AstroDrabb) over my shoulder, and said; "He doesn't know what the **** he's talking about. He should go to the EFF site and do some reading. His interpretation of the law is worse than what my C++ coding is like, and that's saying something." (AFAIK, she doesn't know how to program C++. Only BASIC.)
Things to check: derivative works, DMCA, reverse engineering.
"Don't give legal advice if you're not a lawyer." "Wait...never mind. DO give legal advice! We need the money."
The call was fast, they were very polite.
They will want to know the company name and address (see the other posts on this subject).
The person I talked to did not know about the issue, they clearly have not gotten many calls about it yet.
... of Free Software is that it is not under the thumb of any established organization.
It's out of the control of any business, government or church. That is a big part of what makes it attractive to work on. No organization directing the work for its own hidden benefit, to the detriment of the larger community. No one else calling the development tune. That would not be as true with government funding -- we would see conflicts as government tries to get its requirements and ambitions met by the software. TIA in your OS anyone?
And it's a big part of the appeal for many governments and businesses. They don't have to worry about their competitors (other nations or businesses) using the software against them somehow.
Slashdot Mirror
In the software market, MSoft is going to try to swallow your niche if it is at all profitable. As the monopolist, it is pretty easy for them to do so -- and the toothless attempts at reining them in have shown us that they can treat regulation as a minor cost of ongoing business. As a monopoly, they can just pass those costs on to customers, without hurting their profits or market share.
If your primary business is software, you have to try to undermine MSoft -- there really is no place to grow your business to a large size otherwise. So of course IBM has to try to undermine MSoft, as does Oracle and any other software maker that wants to grow to any substantial size. And if you are small, you have to do it in subtle ways, so that MSoft does not notice and squish you like a bug.
With no monopoly on the OS and no monopoly on the hardware, it's going to be hard for IBM to lock in a new monopoly.
The modern nation state is not a bad analogy either
The proper analogy is to the modern non-democratic nation-state, which was first overthrown in 1776. Now authoritarian power is vested in the corporation. Given the "L'etat, c'est moi" attitude of most CEOs, I wouldn't be surprised to see yet another Reformation or Enlightenment-style overthrow of corrupt autocratic leaders in our lifetime.
If anyone needs to point to "harm to the consumers" because of monopoly power, here it is! The only reason MS can raise its prices to cover these costs is because it has a monopoly. The consumers are directly harmed by MS monopoly.
Fines are NOT a "cost of doing business", they are a punishment. MS is putting its customers in the way of the lash here. How is that "a cost of business", or anything but harm? Clearly, the only punishment that will affect MS is getting drawn and quartered (split up). Thank goodness it's not considered a cruel and unusual punishment for corporations!
A while ago, some internal Diebold memos were leaked showing that their practices were (to put it mildly) very shoddy. At least one generation of machines were horribly insecure, making it trivial to untracably stuff the ballot box.
They should never have been allowed to sell their machines after this came out.
Winning a court case should be pretty easy, given the problematic design of Diebold systems. They look as though they were designed to help vote fraud (though the reality is probably that they were designed to allow Diebold to cover up software problems).You should be! The Diebold systems are designed in a way that makes vote fraud simple and easy.
How to steal the Vote with DieboldThe security holes were already being used, when they were exposed on the Internet (publication of internal Diebold memos). This made them available to everyone, and put pressure on Diebold to fix the problems....
It wasn't code, it was bad design. One that allowed the vote totals to be fudged in untraceable ways. Vote totals kept in MS Access databases without a password; audit logs that could be edited without leaving a trace; three sets of the vote totals, with different uses, so that one could edit the set that reported totals, without changing the set that gets shown for the detailed precinct report. Inside A U.S. Election Vote Counting Program
Human error we're going to get no matter what, so we want a system that will minimize it. Not one that makes it difficult to spot.
Damaged punch cards are easy to see, bad optical scanners will get noticed. Problems with voting software in black-box voting systems are much harder to spot, if there's no paper trail to audit.
But the problems with Diebold systems are much worse than this. The vote counts are stored in a MS Access database, which can easily be edited by anyone who knows how. They are not necessarily protected with a password. Even worse, the audit log is also editable, so that it's possible to go into the system, alter the votes, and then edit the log to hide all traces.
Bev Harris' expose/Diebold memos And more of Harris' exposePerhaps Diebold was keeping this backdoor in so that they could edit vote counts when their systems malfunctioned. However, others can also use the backdoor, and perhaps they have. There were some very squirrely results out of Georgia last election, where the pre-election polls were at wide variance with the results.
"2. Many unemployed and about-to-be-unemployed US engineers would be happy to work for less money (within reason)in order to keep their jobs, however when this is suggested to companies the companies usually choose to go with outsourcing. If an engineer is willing to take a 30 - 40% pay cut to save his/her job, why isn't this offer taken seriously by most companies?"
It's not enough, compared to the savings from outsourcing. Plus, the wage rate in the U.S. hasn't gone down 30-40% yet. Employee loyalty is a thing of the past, so the company probably figures (correctly) that the engineer will be jumping ship for a better salary eventually.
3. "What can American engineers do to lower their cost of living in order to try to compete with 3rd world salaries?"
Learn to live without the new SUV or BMW. Forget the half-million dollar home in Silicon Valley, and get a smallish apartment for $1,500 a month. Yea, your kids might have to share a bedroom, and your family might have to share one bathroom instead of two. But you're going to have to live more like someone with a Wal-Mart job than like a CEO.
4. "Any idea what the 'Next bit thing' will be and what do we do in the meantime?"
I predict big growth in butlering and maid service, as well as the tutoring, nannying, gardening and chauffeuring professions. There will be significant demand for people in those professions, and it *can't* be outsourced.
More seriously, look for jobs that require a lot of capital to support them. Those, and jobs that require a lot of coordination between the producers and their markets. That's where the long-term U.S. growth will be.
"6. (related to 5) What if you'd much rather develop code than manage projects?"
Get into an area where you're developing in close coordination with your customer. Projects that can be done with a waterfall-style approach are much more easily outsourced that those which require an iterative rapid-development approach. Look for projects that require a good understanding of the customer and the market.
7. "what do we do with the millions of US workers that would be put out of work in this scenario?"
Long term, wage rates in the U.S. will drop and in the outsourcing countries will rise, and we will all be employed. Given the productivity gap between the U.S. and India/China, U.S. tech wages shouldn't have to drop 10-fold before offshoring is no longer attractive. In the short term, "let them eat cake". [Sorry, it's the only possible answer an offshoring advocate can give to this scenario. Expect them to sidestep it instead, and wave their arms about retraining.]
We need to help this adjustment along. Wages are sticky downwards, and that could produce a lot of unemployment. We need a bit of positive inflation, so that white-collar paychecks can erode in real value quickly rather than producing widespread unemployment.
"Oh, and if millions are unemployed, who is going to pay the taxes to support the schools that we supposedly need to train workers for the 'jobs of the future'?"
No one. First, there probably won't be millions of unemployed, merely a rapid erosion of white-collar pay rates. Corporations won't pay more taxes, they have already figured out how to shift and hide profits with transfer pricing. The wealthy have steeply reduced their share of the tax burden, and look to be able to keep it by exploiting the social divide between religious and not-so-religious Americans. And yes, that means our distribution of wealth is going to look much more like India than it does now. We're in for a long-term erosion of the middle class, until India catches up.
1) Heavily subsidize higher education and health care, like other countries do.
2) Encourage investment in domestic start-ups with tax breaks, while raising taxes on income earned abroad.
3) Crack down on transfer-pricing abuses by multinationals. Right now, transfer-pricing schemes are being used by many to evade taxes they used to pay. The ability to evade taxes through transfer pricing encourages companies to off-shore.
4) Pressure the governments of India and China to re-value their currencies. Part of the offshore pressure comes from their 'beggar-thy-neighbor' policy of pegging their exchange rates far too low. It won't hurt as much when trade in goods and services are in balance.
5) Lower the tax burden on those who are hurt (educated and uneducated workers) and raise it on those who benefit (the wealthy). Yes, this doesn't encourage onshoring, but it will help ensure that we'll all see the benefits of the free trade.
We can expect to remain at or near full employment. After all, wage rates will fall (in real terms) unti l full employment is reached.
That is what has happened to manufacturing workers: their real income has dropped over the last two decades, due to increased competition. Yes, there's still employment, but most of the decent middle-class jobs have been replaced with Wal-Mart struggle-to-survive jobs.
Sure, we'll have jobs. But they won't pay nearly as well as they used to. Do we really want that to happen to another large sector of the economy?
Anyone have different answers than these:
My off-the-cuff guess is that the U.S. has plenty of capital and farmland, and shortages (relative to India/China) of educated and uneducated workers. So the wealthy and farmers are going to benefit. Workers in high-capital industries will probably benefit, too.
Everyone else 'loses'. Given the gap between Indian/Chinese and U.S. wages and much narrower gap between Indian/Chinese and U.S. productivity, we are going to see downward pressure on salaries for a long, long time. Wages for mfg. wages have stagnated or dropped since NAFTA, and show no sign of rebounding.
Will this be different from NAFTA? Yes! Mexico is relatively small, population-wise. The educated population of India is comparable in size to the educated population of the U.S. The effects should be much more severe.
How is this different from offshoring to Ireland? Ireland is relatively small, and is a developed country. The wage and productivity gaps were much, much smaller than those between the U.S. and India/China.
Supporters of offshoring like to say that "everyone benefits" from the increase in economic efficienty. But the economic theory of trade doesn't say that, it says that overall the world benefits. There are important caveats:
1. The benefit does not have to be shared between the two (or more) countries involved, depending on circumstances.
So, who *is* benefiting from offshoring to India and China?
2. Within a country, the 'plentiful' factors of production usually benefit, but the 'scarce' ones see their share of the pie shrink. If the pie grows enough, the 'scarce' factors see a gain, but it is certainly not a given. [Scarce and plentiful are relative terms. A country can have a high proportion of educated workers, like the U.S., and still have a shortage compared to say, India or China.]
In the U.S., who is going to benefit (what factors are 'plentiful')? Who is going to -- relatively -- lose out? How badly are the 'losers' going to suffer? How large is this group going to be? Should we do anything to help them out?
Is the current situation different from what happened with manufacturing jobs going to Mexico under NAFTA? How, aside from it being white-collar work rather than manual labor?
Is the current situation -- free trade with India and China -- any different from the migration of jobs to 'low-cost' Ireland a few years ago? How?
Which is exactly what is happening. Industrial countries have (comparatively) a surplus of wealth, India/China a (comparative) surplus of educated and uneducated labor. Economic theory (trade theory in particular) predicts that:
1) The groups that supply something that is relatively scarce in a country will benefit less by free trade (perhaps hurt).
2) The groups supplying something plentiful will benefit.
3) Overall, the production per capita and per unit of input worldwide will increase. The only question is "Who will see the benefits of free trade?"
In the industrial countries, the wealthy will benefit, workers -- educated and otherwise -- will probably be hurt. The spread between haves and have-nots should increase, and the middle class will thin out. In India, the opposite should happen.
The difference between China/India and the industrial nations is large, and the populations involved are equally huge. India and China have been fairly isolated from the rest of the world for most of the last century, thanks to isolationist governments. Now, the floodgates are opening, at the same time that the Internet has built a 'railroad' for intellectual work. The cost to transport intellectual work has dropped tremendously, and a vast reservoir of severly underemployed educated workers has been added to the world economy. Wages for educated work are likely to drop severely in real terms over the next several years, in the industrial nations. We are only seeing the beginning - there is almost an order of magnitude spread between Indian/Chinese wage rates and Silicon Valley ones.
Further, wages and prices are 'sticky'; people are reluctant to work for a lower wage and companies are unwilling to cut prices. The economic adjustment to this sea change is going to be very painful unless industrial countries have an increase in inflation to help hide the drop in real wages. Yet in almost all the industrial nations, we are saddled with central banks who are adamant about preventing inflation (with the exception of Japan). This is going to be a bumpy ride....
Japan has been doing poorly because the central bank was utterly stupid, and pushed Japan into a Depression, complete with deflation and a liquidity trap.
It is only in the last year that the Japanese central bank has wised up, and started taking action to create a little inflation. Before this, the monetary policy was too restrictive, and undid all any pump-priming deficit spending that the government attempted.
Japan's prosperity or lack of it has nothing to do with being willing to work for miserable wages, and everything to do with mismanagement on the part of their government.
Indeed, it is a great wage-leveller. Unfortunately, the populations of India and China are so large that outsourcing will pull industrial-country wages down much further than it will raise Indian/Chinese wages, by the time the wage rates settle into equilibruim. Industrial countries wealth/income profiles will come to resemble those of India/China.
Who really benefits? India and China have a comparative advantage in both educated and uneducated labor. Industrial countries in general have a comparative advantage in industries that require a lot of capital. The US has an additional advantage in those that require land -- agriculture and resource extraction.
So in the US, farmers and the rich should benefit, and the rest of us should see our living standards decline (perhaps tremendously). The industrial countries are democracies; their citizens are unlikely to let a widespread erosion in living standards continue. I forsee a strong backlash against Free Trade developing, and strong limits to trade rising over the next decade.
Really, most of what we in the developed world spend money on is status symbols. The value in a Mercedes or a Rolex isn't in the actual car, it's in the status they provide. Why do people buy new cars? Status. Lights inside your case, to wow your friends at the LAN party? Status. A neatly mowed front lawn? Status. (Seriously! Read Thorstein Veblen's seminal _Theory of the Leisure Class_.) Martha Stewart housewares? Status.
The key to value and status is scarcity. Period. If something is useful, beautiful or cool, and scarce because it's programmed into the MMPORG, it's valuable. That scarcity value is no different than the scarcity value that comes from being stamped by a trademark (Rolex, Mercedes), artificial scarcity from a cartel (diamonds), or actual scarcity (land in Tokyo).
Outside of monopolies and cartels, what makes something scarce (and therefore valuable) is the time it takes to make or get. Stuff is valuable in MMPORGs because it takes time to get. This is no different than what makes some physical object valuable.
If you think about it, a deed or patent is just as virtual as that leet EQ weapon. There is no physical reality there, just ideas in peoples' heads (and laws to back them up, which are also virtual). The value is only in the usefulness and scarcity.
Which raises the question; How long until governments start trying to tax the online economies in MMPORGs?
Really, the general case is more like "Spend it on a Porsche, the Porsche CEO will pay their housemaids and gardeners. ". Though in Porsche's case, the workers are unionized, so they do get a fair wage and therefore a share of the wealth.
Wealth doesn't trickle down when management and owners skim it off. For example, a lot more wealth trickles down to workers in unionized grocery stores than in a Walmart.
The basic point is correct, however. Distribution is the key, and famines these days occur mainly because of disruption(e.g. war), or inefficiencies (e.g. monopolies and exploitation) in the distribution networks. Oddly enough, monopolies on food distribution don't survive long in democratic countries....
Many Americans own equities, but actual wealth is increasingly concentrated in the top couple of percent. The comparitively few equities that most Americans own are not likely to make up for the loss of wages they'll face from outsourcing.
It's much more likely that the real beneficiaries will be that top couple percent who hold the bulk of the wealth. And the half that doesn't hold equities will not benefit, they will be harmed.
Free trade benefits the 'factors of production' that are relatively plentiful: in the U.S., it's land and capital. Until recently, I would have said educated workers too, but the outsourcing craze shows that my uninformed gut feeling on that was incorrect. The shortages in India and China are land and capital.
If India and China were small or medium-sized countries like Mexico or the Philippines, I would not worry a whole lot -- the U.S. economy and population would be large enough to absorb the shocks from free trade without huge changes in living standards. But the populations of India and China are huge relative to America's, and their economies significant. It's entirely possible that when the dust settles, America ends up changing more than they do.
There are more jobs in America than there were four years ago. However, jobs have grown at the slowest rate since the Hoover administration (that's the Great Depression, for the history-challenged).
Exactly. I'm wondering how much SCO had to pay, and to whom, to get this guy in print. The article is hardly an 'analysis', so much as an attempt to lay out the logic SCO wants businesses to see. ("Pay us, it's cheaper than getting sued later.") There was no attempt to gauge the liklihood that SCO had any valid case, which is the key issue. Of course, how could he -- the author has no background in IP law. Any decent analysis of the risks has to take the relevant IP law into account. Otherwise, it's just uninformed noise.
How does it survive? It doesn't! The work goes where there is a 'comparitive advantage', if the economic system is working correctly. Right now, India oddly enough has a 'comparative advantage' in educated work; its educated people have been severely under-employed compared to educated people in the U.S.. The reason things are shifting *now* is that the cost of transporting their work from one market to another has dropped immensely because of the internet. On the other hand, the work of the uneducated is largely manual labor, and the transportation costs of moving that work between markets has changed a lot less. (Besides, the products of the manual work have been protected in the U.S. for most of the last century. The U.S. *still* has trade restrictions on textiles!) A third thing is also going on -- the U.S. is being lent a lot of money from the rest of the world (esp. China and Japan). For this reason, the U.S. dollar is far, far higher than it should be. So you can adjust that cost-of-living figure somewhat for an overvalued dollar. Don't be surprised if, in a few years, the dollar has dropped so much that you see more like "$22,000 = a decent middle class life in India"
My wife *is* a lawyer (working in IP). She was reading this (AstroDrabb) over my shoulder, and said; "He doesn't know what the **** he's talking about. He should go to the EFF site and do some reading. His interpretation of the law is worse than what my C++ coding is like, and that's saying something." (AFAIK, she doesn't know how to program C++. Only BASIC.) Things to check: derivative works, DMCA, reverse engineering. "Don't give legal advice if you're not a lawyer." "Wait...never mind. DO give legal advice! We need the money."
Heh, I've seen the BSOD on Windows XP twice in the last week. More stable Windows may be, but still not adequate.
The call was fast, they were very polite. They will want to know the company name and address (see the other posts on this subject). The person I talked to did not know about the issue, they clearly have not gotten many calls about it yet.
... of Free Software is that it is not under the thumb of any established organization.
It's out of the control of any business, government or church. That is a big part of what makes it attractive to work on. No organization directing the work for its own hidden benefit, to the detriment of the larger community. No one else calling the development tune. That would not be as true with government funding -- we would see conflicts as government tries to get its requirements and ambitions met by the software. TIA in your OS anyone?
And it's a big part of the appeal for many governments and businesses. They don't have to worry about their competitors (other nations or businesses) using the software against them somehow.