Subject: Re: Two things
From: ghost@aladdin.com (L. Peter Deutsch)
Date: Mon, 29 Aug 94 07:09:20 PDT

>    > Since Cygnus and Crynwr and Yggdrasil and Hundred Acres and RTR and
>    > Canta-Forda Computer Lab are all proofs of #1, the only possible
>    > discussion is not whether, but how many businesses can make money off
>    > free software.
> 
>    Also, how many businesses of what size.  As far as I know, Cygnus is
>    the only business on the list with a gross of over $1M per year.
> 
> From the perspective of a social scientist, that doesn't matter.  It
> might matter from the perspective of a businessman, who might not want
> to be part of an industry of small businesses.  Some people like big.

Even from the perspective of a social scientist, the question of how many
people are employed, and the question of their aggregate or average
income, are two different questions.  How about "how many businesses
employing how many people and of what total size"?

>    > That would, paradoxically,
>    > make everyone wealthier on average, but computer programmers poorer in
>    > particular.
> 
>    Doesn't seem like much of a contradiction to me.  Whenever you find
>    someone willing to produce goods or services for a lower price in an
>    inelastic market, it makes that person poorer and his customers richer.
> 
> But not too many markets are inelastic.  And, if *everyone* is getting
> more efficient, then we're all getting wealthier.

Well, look at all the companies that are going "lean and mean" these days.
Their customers may be getting wealthier (relatively), but their employees
are getting squeezed harder and harder.  That's exactly the point I was
making.  Unless *literally everyone* gets more efficient, the squeeze on
the employees deprives them of more than they gain by being able to buy
other things more cheaply.  And "more efficient" means lower costs; in a
completely labor-based situation like free software businesses, that
simply means people willing to work for less money.

> And about the only
> way to keep a company needing to be more efficient, is to protect them
> from competition, for example (and now we come full circle) by
> granting them a patent.

I'd certainly agree with that.

An argument has been made that in a perfectly efficient market, no seller
can make a significant profit, because no one can sell significantly above
cost.  With the globalization of commerce (and software is a good example
of this), the effect of this will be to pull all prices, and hence all
incomes, down to that of the country with the lowest production costs --
both for goods and services.  That is why I get uneasy when people make
arguments that claim some kind of moral or natural imperative for a
perfectly efficient market.

L. Peter Deutsch :: Aladdin Enterprises :: P.O. box 60264, Palo Alto, CA 94306
ghost@aladdin.com, ...decwrl!aladdin!ghost ; voice 415-322-0103 ; fax 322-1734
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