>Let's start with a micro model. <snip> i was waiting to see if anyone noticed that michaels well thought out micro model has two fundamental flaws.
flaw #1: "ex nihilo" in the first model, the word processor was created with time and effort. in the second, OSS model the word processor was effectively created "out of nothing". flaw #2: "zero sum game" the difference between the two models is that in the first, the landscaper has no job. whereas in the second, OSS model, bill the developer has no job. the cited advantage of the second model is that there is extra value because a yard was landscaped - but as flaw #1 point out, the extra value is because software magically appears ex nihilo. this makes the model a zero sum game. the first model and the second model are effectively the same, the only difference is in who loses their job. another way to look at the model - imagine that a bunch of people donate their time to go around and landscape peoples yards (eg. FLF - the Free Landscape Foundation) instead of writing free software. just because it's free doesn't mean that someone, somewhere didn't have to 'pay' for it by investing time and effort. but this brings up the *interesting* point - the interesting point that michael makes is this: "once software is created, it is effortless to *reproduce*." now *that* point is worth exploring... oh, and if we can manage to use another fancy latin phrase, that be great too. ;-) Josh Coates www.jcoates.org -----Original Message----- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] Behalf Of Michael Halcrow Sent: Thursday, April 07, 2005 2:41 PM To: Provo Linux Users Group Mailing List Subject: Re: US Economy On Thu, Apr 07, 2005 at 12:48:37PM -0600, Sasha Pachev wrote: > So after all, as much as we do not like to hear it, the net result > of the existence of open source might actually be somewhat close to > zero even if it becomes responsible for close to 100% of all the > software ever written. I do not follow your reasoning. Let's start with a micro model. Alice has $100 to spend. She wants to write a poem, brew some coffee, and have some work done to her landscaping; that is what makes her both productive and happy. The net wealth in an economy is not measured solely in physical capital; it is also measured in happiness and free time. A quality standard of living is a primary factor in any economic model. Now suppose that Bill wrote a word processor. Alice wants a word processor; she can make a copy of Bill's word processor for some time and effort, but Bill asked the government to punish Alice if she does so, and the government agreed to do it. So Alice asks Bill to make her a copy of the word processor he wrote. He obliges her, for a $50 fee. Now notice a couple of attributes of this transaction. Number one: Bill spent a large amount of up-front time to produce his word processor, but he only had to expend very little *additional* effort to duplicate his word processor. In other words, marginal sales do not directly correlate with marginal amounts of work. This means that additional sales do not necessarily correlate with a better product. I'm sure we can all think of some prime examples of this phonomenon playing out. Number two: There is no scarcity. In other words, Alice making a copy of the word processor does not take away the anyone else's word processor. If there are N copies of the word processor, and Alice makes a copy for herself, there are then N+1 copies of the word processor. Since that word processor allows Alice to write her poem, she is happier, and others benefit from her poem. The economy is richer for it. At this stage, Alice is left with $50 to spend. A coffee brewing machine costs $50, and a landscaper costs $50. Alice must now choose between the two. Let's say, for argument's sake, that she purchases the coffee brewing machine. The end state of the micro model is this: Bill - Traded his time and effort to produce his word processor - Has $50 - Has a copy of the word processor, with exclusive rights to copy it Alice - Traded her time and effort to produce a poem - Has $0 - Has a copy of the word processor, with no rights to copy it - Has a coffee brewing machine Coffee company - Traded their time and effort to produce a coffee brewing machine - Has $50 Landscaper - Out of a job So we have two copies of a word processor, a coffee brewing machine, a poem, and $100 total. Each of the prior elements in this model have a monetary value to someone. Now let's consider the scenario where Free Software is involved. Alice has $100 to spend. She wants to write a poem, brew coffee, and have her landscaping done. She downloads a copy of OpenOffice.org, expending a little time and effort, and uses that to write her poem. Bill downloads the word processor too. Alice still has $100. It's not like that $50 she would have paid Bill is suddenly gone into the netherworld. So she buys her coffee brewing machine for $50. She has $50 left over, which she spends on the landscaper. The end state of the micro model is this: Lots of people who enjoy writing software in their free time / a corporate sponsor who paid a one-time fee to a developer / a government agency / whatever: - Traded their time and effort to write a word processor (this is where the micro model gets a little hairy, but dang it, it's working this way already today) Bill - Out of a job - Has a copy of the word processor, with the right to copy it Alice - Traded her time and effort to produce a poem - Has $0 - Has a copy of the word processor, with the right to copy it - Has a coffee brewing machine - Has a nicely landscaped yard Coffee company - Traded their time and effort to produce a coffee brewing machine - Has $50 Landscaper - Traded his time and effort to landscape Alice's yard - Has $50 So we have two copies (or as many as you please) of a word processor, a coffee brewing machine, a poem, a landscaped yard, and $100 total. Each of the prior elements in this model have a monetary value to someone. But notice that there is one extra element in this micro model: the landscaped yard. In other words, the *second* scenario is actually *wealthier* than the first scenario. And that's before we even consider the theoretically unlimited copies of the word processor. The true dynamics of an economic system are much more complicated than this, but you can see how the concept of ``intellectual property'' can be displacing wealth without creating any new jobs. In fact, it very well could be argued that this paradigm is *costing* us overall wealth. I do not expect this to be a very popular position to present to this audience, since most everyone here finds himself in Bill's shoes, to some degree or other. Of course, Bill could always pick up landscaping -- after all, there's enough extra cash floating around now to furnish the demand. ;-) Mike .===================================. | This has been a P.L.U.G. mailing. | | Don't Fear the Penguin. | | IRC: #utah at irc.freenode.net | `==================================='
