Tuesday, March 09, 2004
More Conversation with Eric Raymond, Part 7
> Yes, I do support such laws. I support them
> because I believe that if we're to have governments
> at all, the process of government, *including
> the software it uses*, ought at least to be
> transparent to citizen scrutiny.
I don't think that's necessary, particularly when the
penalty for such a rule is confining yourself to
entities far less capable of making a profit.
Granted, you don't agree that they will, in fact, make
less profit. I discuss that later.
> Bad argument. First, it's not true. Have you every
> tried to reconstruct the recipe for (say) a cake
> by examing the finished product?
A competent cook can usually figure out how something
they eat was made. That's why so many chefs visit
competing restaurants. You'd have a hard time
convincing me that a RECIPE is anything nearly as
complicated as, say, an operating system, or a desktop
office suite.
> Besides, even if your premise were good, the
> relative cost of discovering the recipe would
> be a red herring. What you really need to make
> your case is an argument that explains why
> good restaurants can live without secrecy
> rent and asymmetrical information but programmers
> can't.
Restaurants that are very good compete on raw skill.
However, you wouldn't be able to walk into a
restaurant and get the food for free. Restaurants
don't face FREE (as in cost) competition.
In an open source world (particularly when the product
is licensed under the GPL), you DO face free (as in
cost) competition. Heck, you might even have to face
a free version of your OWN product, as Sun does with
OpenOffice. So, it becomes a LOT harder to make a
buck. Sun is managing it to a certain extent, and
they are doing it on brand, but they are NOT making
the kind of revenue that proprietary software
companies make.
> Incorrect. You have every right to debate me about
> this, otherwise I
> wouldn't be bothering to argue with you. BUT...do
> you know what
> happens to the hourly wages of mechanics when the
> price of automobiles
> drops? Can you explain why? (Hint: the concepts of
> "factor of
> production" and "bundled good" are important.) Now
> use this
> explanation to predict the salary trends for
> programmers as more
> software becomes open source.
As the cost of automobiles goes down, the price of
auto mechanics goes up. The reason is that lower
priced automobiles results in higher demand for
automobiles, leading to more autos on the road, and
hence, more demand for mechanics.
Microsoft used that same model for most of its
history. Windows (or DOS) was low cost relative to
alternative operating systems. They went for volume.
That volume created a large unified market atop which
to sell software.
Justin Frankel did the same thing with WinAmp. CHarge
a low cost for the product, and it is more likely that
SOMEONE will bother sending you the fee.
I defend outsourcing along similar lines. Lower
manufacturing costs leads to more product sold,
leading to more demand for products that require those
manufactured goods. For instance, if Motorola can
make smartphones cheaper, that leads to MORE demand
for cell phones, and MORE opportunities for developers
who write software for cell phones.
Your error, however, is in assuming that these trends
apply down to zero. They don't. Take, as an example,
a coat. If you paid $10 for it, you are less likely
to pay $50 to have it repaired. You'll just buy a new
coat. The same applies to TV sets. With TV sets as
low in price as they are, it costs MORE to get them
repaired. Therefore, you just get a new TV set.
Apply this to the software market. I'm always stunned
how much SAP consultants make, particularly when SAP
seems like such antiquated technology. SAP is also
horrendously expensive. Since it is so expensive, the
big companies who pay for it think little of paying
high consulting rates to customize it. The same
applies to Oracle databases. The high cost of an
Oracle installation provides a lot of cover to high
database administrator salaries. The high cost of
Adobe Photoshop enables Paintshop Pro to charge $99,
and call itself a bargain, even though that price is
higher than the software average.
In other words, if you take the price of software down
to zero, it is simply FALSE to claim developer
salaries will skyrocket. As you cheapen the value of
software, you cheapen the value of the people who make
that software.
Granted, truly expensive software would so throttle
the market as to make salaries go down. I would
consider a graph of salary to software prices to be
bell shaped.
By the way, this was the crux of my argument in this
article: http://zdnet.com.com/2100-1107-992824.html
> If you don't have the mental toolkit to do the above
> exercise, you do
> *not* yet understand the economics of open source
> well enough to be
> writing public articles about it. Go read David
> Friedman's "Price
> Theory" my "The Magic Cauldron", and Varian &
> Shapiro's "Information
> Rules". Then think until you grok them. Then...and
> only then...will
> you be prepared not to mislead your readers on this
> topic.
Spoken like a true high priest of the open source
movement. Bravo.
As an aside, it IS possible to discuss issues with
people who disagree with you without insulting them.
You are smart, and you've obviously thought a lot
about this issue. That doesn't mean that you are
OBJECTIVELY right. It just means you have a very
well-formed opinion.
> I'm not sure I even understand what you're claiming
> here. But perhaps
> your misconception of my beliefs will be addressed
> if I tell you that
> I'm a market anarchist? I would cheerfully abolish
> government in
> favor of a society mediated *entirely* by the profit
> motive, though I
> may have a bit wider conception of the latter than
> you because I think
> many of the most important markets aren't monetized.
Oddly enough, I'm not an economic anarchist. I
believe that government should ensure that everyone
has decent education, health care, and welfare. I
think those are justified in terms of enabling
individuals in a society to have CHOICES. You have
fewer choices if you are uneducated, or fear losing
health care and salary if you change jobs. That
doesn't mean I think Europe does it perfectly, but
there is a lot to be said for a credible social safety
net.
But that all is beside the point. Thanks for relating
your stance to me.
> Yes, I do support such laws. I support them
> because I believe that if we're to have governments
> at all, the process of government, *including
> the software it uses*, ought at least to be
> transparent to citizen scrutiny.
I don't think that's necessary, particularly when the
penalty for such a rule is confining yourself to
entities far less capable of making a profit.
Granted, you don't agree that they will, in fact, make
less profit. I discuss that later.
> Bad argument. First, it's not true. Have you every
> tried to reconstruct the recipe for (say) a cake
> by examing the finished product?
A competent cook can usually figure out how something
they eat was made. That's why so many chefs visit
competing restaurants. You'd have a hard time
convincing me that a RECIPE is anything nearly as
complicated as, say, an operating system, or a desktop
office suite.
> Besides, even if your premise were good, the
> relative cost of discovering the recipe would
> be a red herring. What you really need to make
> your case is an argument that explains why
> good restaurants can live without secrecy
> rent and asymmetrical information but programmers
> can't.
Restaurants that are very good compete on raw skill.
However, you wouldn't be able to walk into a
restaurant and get the food for free. Restaurants
don't face FREE (as in cost) competition.
In an open source world (particularly when the product
is licensed under the GPL), you DO face free (as in
cost) competition. Heck, you might even have to face
a free version of your OWN product, as Sun does with
OpenOffice. So, it becomes a LOT harder to make a
buck. Sun is managing it to a certain extent, and
they are doing it on brand, but they are NOT making
the kind of revenue that proprietary software
companies make.
> Incorrect. You have every right to debate me about
> this, otherwise I
> wouldn't be bothering to argue with you. BUT...do
> you know what
> happens to the hourly wages of mechanics when the
> price of automobiles
> drops? Can you explain why? (Hint: the concepts of
> "factor of
> production" and "bundled good" are important.) Now
> use this
> explanation to predict the salary trends for
> programmers as more
> software becomes open source.
As the cost of automobiles goes down, the price of
auto mechanics goes up. The reason is that lower
priced automobiles results in higher demand for
automobiles, leading to more autos on the road, and
hence, more demand for mechanics.
Microsoft used that same model for most of its
history. Windows (or DOS) was low cost relative to
alternative operating systems. They went for volume.
That volume created a large unified market atop which
to sell software.
Justin Frankel did the same thing with WinAmp. CHarge
a low cost for the product, and it is more likely that
SOMEONE will bother sending you the fee.
I defend outsourcing along similar lines. Lower
manufacturing costs leads to more product sold,
leading to more demand for products that require those
manufactured goods. For instance, if Motorola can
make smartphones cheaper, that leads to MORE demand
for cell phones, and MORE opportunities for developers
who write software for cell phones.
Your error, however, is in assuming that these trends
apply down to zero. They don't. Take, as an example,
a coat. If you paid $10 for it, you are less likely
to pay $50 to have it repaired. You'll just buy a new
coat. The same applies to TV sets. With TV sets as
low in price as they are, it costs MORE to get them
repaired. Therefore, you just get a new TV set.
Apply this to the software market. I'm always stunned
how much SAP consultants make, particularly when SAP
seems like such antiquated technology. SAP is also
horrendously expensive. Since it is so expensive, the
big companies who pay for it think little of paying
high consulting rates to customize it. The same
applies to Oracle databases. The high cost of an
Oracle installation provides a lot of cover to high
database administrator salaries. The high cost of
Adobe Photoshop enables Paintshop Pro to charge $99,
and call itself a bargain, even though that price is
higher than the software average.
In other words, if you take the price of software down
to zero, it is simply FALSE to claim developer
salaries will skyrocket. As you cheapen the value of
software, you cheapen the value of the people who make
that software.
Granted, truly expensive software would so throttle
the market as to make salaries go down. I would
consider a graph of salary to software prices to be
bell shaped.
By the way, this was the crux of my argument in this
article: http://zdnet.com.com/2100-1107-992824.html
> If you don't have the mental toolkit to do the above
> exercise, you do
> *not* yet understand the economics of open source
> well enough to be
> writing public articles about it. Go read David
> Friedman's "Price
> Theory" my "The Magic Cauldron", and Varian &
> Shapiro's "Information
> Rules". Then think until you grok them. Then...and
> only then...will
> you be prepared not to mislead your readers on this
> topic.
Spoken like a true high priest of the open source
movement. Bravo.
As an aside, it IS possible to discuss issues with
people who disagree with you without insulting them.
You are smart, and you've obviously thought a lot
about this issue. That doesn't mean that you are
OBJECTIVELY right. It just means you have a very
well-formed opinion.
> I'm not sure I even understand what you're claiming
> here. But perhaps
> your misconception of my beliefs will be addressed
> if I tell you that
> I'm a market anarchist? I would cheerfully abolish
> government in
> favor of a society mediated *entirely* by the profit
> motive, though I
> may have a bit wider conception of the latter than
> you because I think
> many of the most important markets aren't monetized.
Oddly enough, I'm not an economic anarchist. I
believe that government should ensure that everyone
has decent education, health care, and welfare. I
think those are justified in terms of enabling
individuals in a society to have CHOICES. You have
fewer choices if you are uneducated, or fear losing
health care and salary if you change jobs. That
doesn't mean I think Europe does it perfectly, but
there is a lot to be said for a credible social safety
net.
But that all is beside the point. Thanks for relating
your stance to me.
