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FOSS Development As Economic Stimulus
Posted by
kdawson
on Wed Jan 14, 2009 02:34 AM
from the piece-of-the-action dept.
from the piece-of-the-action dept.
heybus writes "Economist Dean Baker, best known for calling the housing bust and warning of the ensuing economic collapse, has just published his recommendations for how to allocate President-elect Obama's estimated $800 billion economic stimulus plan. Among other things, Baker calls for juicing the economy with $2 billion worth of government spending to support the development of free and open source software. Baker's idea is similar to the New Deal federal arts and writers' projects: the government would fund projects as long as they produce freely available code. In addition to employing programmers, 'the savings [to consumers] in the United States alone could easily exceed the cost of supporting software development.'"
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Open Source (Score:5, Interesting)
Open Source is the ultimate in re-usable investments in the area of computer technology.
Re:Open Source (Score:5, Insightful)
I'm not so sure I agree. When you build a bridge or a dam, you get something tangible that will be with you for 30+ years. Its there, and you can use it until it is demolished or replaced. The Brooklyn bridge, the Hoover Dam, etc have been with us for a very long time.
When you write some software, the benefit is not so obvious over the long term. Things have a habit of being rewritten completely in relatively short intervals. How much of the code from Linux of even 15 years ago is in the current kernel? How much of AutoCAD 1.0 is in the current version? The code gets rewritten and forgotten. The programmers learn experience and gain skill, but that isn't something that we need stimulus packages for. If we're going to spend unfathomable amounts of MY money, lets have something to show for it that will still be useful in 80 years.
Parent
Re:Open Source (Score:5, Insightful)
And that is exactly one of the benefits of Open Source/Free Software. You have the ability to change the software so that it will keep working in 15 years. With closed source/non-free software you have to rely on the software provider to keep their software updated while the runtime environment changed.
It doesn't matter if code is rewritten or forgotten. When you have the source you can always see it. If AutoCAD 1.0 does exactly what you need, then why would you want to get 2.0 or 23.0? Unless it's FLOSS, you simply have to, because 1.0 simply might not run on the replacement hardware. Software does not break because of old-age, unlike hardware.
Parent
Re:Open Source (Score:5, Insightful)
Software does not break because of old-age, unlike hardware.
Addendum: In order for this to work, you need source-level access to the entire software stack from the OS upwards.
Parent
Re:Open Source (Score:5, Insightful)
Addendum: In order for this to work, you need source-level access to the entire software stack from the OS upwards.
Er no. Once you have the source of the app, you can port it to different APIs, or make a wrapper to replace old APIs it uses. Of course if the APIs aren't open source, you have to rely on the documentation, if there is no documentation then you have to work on deduction.
It's better if everything is open, of course, but it doesn't all fall down if one bit isn't. Because the rest is open, you can always replace the bit that isn't.
Parent
Re:Open Source (Score:5, Insightful)
It doesn't matter if code is rewritten or forgotten. When you have the source you can always see it. If AutoCAD 1.0 does exactly what you need, then why would you want to get 2.0 or 23.0? Unless it's FLOSS, you simply have to, because 1.0 simply might not run on the replacement hardware. Software does not break because of old-age, unlike hardware.
Try getting any piece of old software to run and you know it's a big pain. Hardware changes, APIs change, ABIs change, formats of choice change, they don't respect modern UI conventions, operating system hints, the anicent IPC means it doesn't talk to anything else and so on. FLOSS doesn't magically make it work on more hardware/environments, unless you're running version 2.0 or 23.0 of the open source software too. Yes, you have to pay the software provider for new versions but you're somehow assuming the FLOSS fairy would deliver updated code, but that work has to come from somewhere too.
The real advantage to open source isn't that there's less maintenance required, it's that without competiton there's no reason for a business not to gauge as much as possible out of their customers. Open source effectively caps what you can charge for a closed source "light" version, what you can charge for a closed source software or workflow because there's the option to go with open source, deal with or fix its limitations. Ideally, the most socially effective solution is typically to write something once - duplication is waste. Except we all know that is a real shitty solution if you got a selfish corporation gouging you for it.
A few open source implementations probably do more than hundred different attempts at making closed source clones to increase overall efficiency. Of course it'll suck for those people that are made superfluous but people are always needed elsewhere. Sure there's practical issues of unemployment and obsolete skillsets but ultimately we'll never have enough productivity. There'll never be a situation where we fundamentally don't need anyone anywhere. If we look a little past the current downturn, during the next 20-40 years most of the western world will have population stagnation or even retraction. The workforce will be less in comparison to the population than ever before. We *are* going to need every hour of work, better spent elsewhere than trying to clone some software that open source could have done once.
Parent
Re:Open Source (Score:5, Insightful)
I wasn't implying it was easy, just that it is possible. And even when you have to recreate the software because so much has changed, it is easier to do so when you can see how it was done in the first place (and maybe even reuse various parts that are still compatible).
With closed/non-free software you simply do not have that option. A way out, no matter how difficult, is always better than no way out.
Parent
Re:Open Source (Score:5, Interesting)
Just to play devils advocate here, in the old days, the long long ago, when you bought a big app from some development house, it was understood that you were going to customize it, and you licensed the source along with the compiled app.
27 years later, I'm supporting one of those apps, and 27 years of customization has created a monster that I dream nightly of killing (preferably, with fire). Another business unit of the same company (which I also maintain) runs the same software, but their version was customized by different people, and the two systems are wildly divergent.
Individual customizations on software are necessarily not a good thing in the long run.
Parent
Re:Open Source (Score:5, Insightful)
Just because you have to rewrite something doesn't mean that it doesn't help you. E.g. I recently joined an open source project which was very good because of what it did, but very poor because of its code structure. So I did a massive refactoring for it, making changes to hundreds if not thousands of lines. This took about an week, but it would have taken much more if I had written the application from the scratch.
Parent
Re:Open Source (Score:5, Insightful)
lets have something to show for it that will still be useful in 80 years.
You're neglecting present value theory and opportunity cost; if we can save people money by developing free software over the next 10 years, the money they saved and spent elsewhere will improve other parts of the economy, which could have longer-term benefits.
Also, is ANYTHING still useful in 80 years? Cars, buildings, roads, all that stuff wears out and becomes obsolete after a long enough time.
Parent
Re:Open Source (Score:5, Insightful)
Also, is ANYTHING still useful in 80 years?
Investments in education.
Parent
Re:Open Source (Score:4, Interesting)
Also, is ANYTHING still useful in 80 years? Cars, buildings, roads, all that stuff wears out and becomes obsolete after a long enough time.
I use plenty of structures that are over 80 years old. I regularly use a bridge built in 1886, a railway (and associated bridges) built in 1838 (and a subway opened in 1889). It's harder to find dates for buildings, but they last hundreds of years if they are built properly and maintained. Many of them were built by private companies, but the economics of the last 50 years means no one wants to build a railway any more, but I expect the ones built by the government to still be useful in 80 years -- even if the track is useless, the clear routes through cities may well be useful.
(Admittedly, the current stone bridge was built because the previous wooden bridge (built 1729) was obsolete, and wooden bridge was built because there was too much traffic for the ferry, which was running a service at least as early as 1086, and probably a lot earlier.)
The expensive part of buildings, roads, railways, bridges etc is the construction (and land), if they're useful maintaining them isn't a problem.
Parent
Re:Open Source (Score:4, Insightful)
The expensive part of buildings, roads, railways, bridges etc is the construction (and land), if they're useful maintaining them isn't a problem.
Maybe maintenance isn't an issue for your stone bridge. But, for lots of bigger bridges (tunnels, roads, etc.), maintenance costs are certainly significant. Here in the US, we have many bridges and roads that have deteriorated to the point where they are barely serviceable, because cities, states, and the federal government focused on building flashy new structures rather than on maintaining the ones they already have.
In fact, this is one of the concerns I have about Obama's plan for massive fiscal stimulus. I worry that the federal government will build even more infrastructure, further increasing an already punishingly high maintenance debt.
Parent
Re:Open Source (Score:5, Insightful)
"When you write some software [...] Things have a habit of being rewritten completely in relatively short intervals."
When you write *privative* software, you meant. Privative software suffers from the "broken glass" problem: for the most part is redo what already was done, both among competing products and between versions of the same product (well, version shifting is more to add featuritis and in cases of dominant products both for vendor lock-in and to maintain third party/competing products at a distance). This is not usually the way with open source software.
"How much of the code from Linux of even 15 years ago is in the current kernel?"
Taking into account Linux is barely 15 y.o. not much, true. But there's indeed quite a lot of code that has been there for long years. And even then, you forget that even shifting code it there to allow third parties to cooperate.
"How much of AutoCAD 1.0 is in the current version?"
Privative software: at the very least one of the major differences among versions is changing file formats for lock-in and disallow competing products to stay at path. Not much benefit on this work for the users.
"The code gets rewritten and forgotten."
It is not. Minix is still used as a learning platform as it is with older versions of *BSDs. I bet that code from ls cp or a lot of basic Unix-related commands haven't changed for ages.
"If we're going to spend unfathomable amounts of MY money, lets have something to show for it that will still be useful in 80 years."
Nobody can forecast the future but, certainly, you will optimize your bets if such a software is open sourced.
Parent
Re:Open Source (Score:5, Insightful)
The roadbed and surfacing on the Brooklyn Bridge have been replaced countless times. It has been reconfigured to deal with a changing balance between road, rail, cycle, and pedestrian traffic. It has been repainted and seen the replacement of untold bolts, cables, struts, stanchions, gimlets, and both left and right phalanges.
In the same way, software is gradually upgraded and remodeled and renovated over the years, but much of the underlying code that powers what we do on our computers today is still more or less verbatim from decades ago.
So I really don't see the difference you're implying.
Parent
Re:Open Source (Score:4, Interesting)
Quite true. In this sense, W. didn't cut taxes at all; he merely deferred them.
Maybe, maybe not.
On the other hand, John Maynard Keynes was right. Recessions are caused by too little spending. Right now, consumers are (on average) overextended, so cannot increase spending. Businesses see no economic returns on additional spending. So they can't increase spending. That leaves government.
Government could waste the money on warfare and bridges to nowhere. Waste is waste, and taxpayers would be paying for it for a long time. Wise governments, in these circumstances, would spend money to create assets that pay dividends long into the future. Improve infrastructure. Not just bridges and highways, but other transportation (rail), energy (R&D, conservation), communication (internet!).
The last thing the government should do is to pass permanent tax cuts. Once the economy starts going again, taxes will have to go up to pay interest on all the borrowing. If that doesn't happen, then inflation and hyperinflation are possibilities.
Parent
Re:Open Source (Score:4, Insightful)
On the other hand, John Maynard Keynes was right. Recessions are caused by too little spending. Right now, consumers are (on average) overextended, so cannot increase spending. Businesses see no economic returns on additional spending. So they can't increase spending. That leaves government.
Or we could wait until the economy re-organizes itself (less finance and builiding, more health care & flying cars or whatever works) so that the economy can go back to creating wealth, enabling spending. By not spending tax dollars during that time, we save wasting wealth (current taxes or future taxes to pay down debt) on government boondoggles.
The economy can best re-organize when there are few inappropriate regulations to slow down the re-organization.
If you really are worried about short-term effects (like unemployment rises) during this period of re-organization, then perhaps reduce the tax on employment (payroll taxes, for example) and you can even offset it with a tax on something we don't want (such as carbon).
I do agree that if we had 10% unemployment for more than a year, it would hurt the human capital stock of the US. Longer term unemployment is linked to significantly reduced future personal earnings.
Parent
"Called the housing bust" (Score:4, Insightful)
I mean who didn't realize housing was in a bubble, besides paid economists with special interests or complete morons? It was blindingly obvious since 2005.
I only credit anyone for calling exactly when it would completely implode. That took brains.
Re:"Called the housing bust" (Score:5, Insightful)
I only credit anyone for calling exactly when it would completely implode. That took brains.
It was rather obvious to anyone who understands the fundamentals. I called it on Downside [downside.com] in 2004. I expected trouble sooner, around 2006. But the Fed cut rates, which merely postponed the inevitable and made it worse. Note that Baker also started predicting trouble in 2004.
This stuff isn't really that hard. There are certain ratios that are grounded in reality. A house is worth about 2.5x to 3x annual income. Stock in a stable company is worth about 10x to 20x earnings. Whenever prices get above those upper limits, they can be expected to go down, and when they get way above those limits, it's a speculative bubble. All speculative bubbles eventually burst, because the supply of "greater fools" who will buy overpriced assets in hopes of selling them for even more is finite
"The job of the Federal Reserve is to take away the punch bowl just as the party gets going. -- William McChesney Martin,, head of the Federal Reserve from 1951 to 1970.
"I still do not fully understand why it happened." Alan Greenspan, October 2008.
Parent
Re:"Called the housing bust" (Score:4, Insightful)
Any one that did not bet their house on it is just being wise after the event. FACT, everyone knows that that level of growth is unsustainable - EVERYONE - the trick was in knowing whta would be the trigger for the collapse and when it would occur.
Parent
Possible Concerns (Score:5, Interesting)
I like FOSS, I like it a lot in fact. However, I still have some concerns about this.
1) Would the overhead of allocating funds be greater than the reward? (always a question in government bullucracy)
2) How would we be sure the right people get the money, and not 'fakes'?
3) How do we make sure projects continue to be free after they stop getting government funding?
Maybe these issues have been addressed, but most people will (or should) ask these questions, about ANY government subsidization/awards.
Re:Possible Concerns (Score:4, Insightful)
The US Government has been the primary investor in general research since WW2 and I would not consider it wasteful at all.
They even pick the winners and losers. They allow the universities and academies to publish to the public and allocate spending where it will be most beneficial.
The Government has done this because private corporations are not willing to pay for something you just give away free to the public, especially if that can be copied indefinitely (like research or software). Sure, it will grow the overall economy but the private company will be at a disadvantage.
In this case, Government quite often is more efficient at growing productivity because everyone gets to use it. Private research is often secret or even intentionally restrictive.
Parent
Just the idea is enough (Score:5, Insightful)
Simply establishing the idea that a source code base is like physical infrastructure will benefit open source projects even more than the actual investment.
Having that reality as a frame of reference would make it much easier to push for the growth of that source code infrastructure.
What about Microsoft? (Score:4, Insightful)
In addition to employing programmers, 'the savings [to consumers] in the United States alone could easily exceed the cost of supporting software development.'"
Sure, but what about Microsoft, or Adobe, or various other companies that make software? Won't this be competing directly with them? It's bad enough that they have to compete with FOSS as is, but FOSS supercharged with two billion government dollars?
Surely the sensible thing to do would be to give the money directly to Microsoft and Adobe and the like. You wouldn't bail out the auto industry by giving money to custom car builders, nor the banking industry by giving money to loan sharks.
Kidding, of course. But I'll bet there will be corporations that won't be thrilled by this.
Re: (Score:3, Interesting)
I would say the money could be much better spent on R&D. Buying patents and opening up technology to the public to use.
FOSS projects might create... I actually don't have any idea what area they could invest in which would be useful... but opening up patents on the other hand allows both FOSS projects and commercial projects create jobs with a lot less overhead.
Let's say I open up a patent on an algorithm that's sitting idle. Now that' it's open you have people putting their own money on the line to i
Re:What about Microsoft? (Score:5, Interesting)
"Sure, but what about Microsoft, or Adobe, or various other companies that make software? Won't this be competing directly with them? It's bad enough that they have to compete with FOSS as is, but FOSS supercharged with two billion government dollars?"
Isn't capitalism supposed to be based on a free market economy? I'm sure that the government hires Adobe and Microsoft to work on software projects they don't readily talk about, doesn't that compete with FOSS software? Seems to me corporate America is all for the free market economy except when it's not to their favor.
Parent
Re:What about Microsoft? (Score:5, Insightful)
Seems to me corporate America is all for the free market economy except when it's not to their favor.
Since when does corporate America follow some sort of ideology? It's in favor of business to never play fair. Being unfair is inherently to your advantage!
Parent
of course, because an ideal market has no profit (Score:3, Interesting)
In a perfectly efficient, competitive market, profit goes to zero. Obviously companies don't want that, so it's in their interest to work against the establishment of a free-market economy.
sure they do (Score:5, Interesting)
Profit is market inefficiency due to lack of competition---someone selling a product for more than the marginal cost of production, which hasn't yet been exploited by an undercutting competitor, often due to difficulty of market access or strongly entrenched incumbents.
Parent
Re: (Score:3, Interesting)
By that logic, the government should stop funding cancer research by universities because it may directly compete with drug companies ?
New Deal? (Score:3, Interesting)
or should we just call it the "Great Leap Forward". I mean, the Federal Gov seems to think money and wealth can be created with the stroke of a pin and all will be well. Right? Nevermind the fact central planning will lead to another "bridge to no where" on a colossal scale!
only if you create some decent criteria (Score:4, Insightful)
How would you decide who gets the money? Would you need to demonstrate suitable skill in coding first? There should be some sort of filtering criteria so the money isn't thrown away, especially since you are redistributing other people's wealth.
Perhaps some type of competition format for ideas would do best. Various private companies such as Google have done this, I believe.
The Limbaughs and O'Reillys of the world... (Score:4, Interesting)
As much as I love the entire open source movement, I don't think it would ever fly, politically, in our current culture.
Re:The Limbaughs and O'Reillys of the world... (Score:4, Insightful)
US Presidents aren't "rulers."
What the hell has happened to this country?
Parent
Re: (Score:3, Interesting)
I think there are a couple ways to decide which projects to fund:
1) Applications for which there is no adequate solution yet(including those that have only adequate proprietary solutions)
2) Applications that would directly benefit various government projects(including improving security of government through code transparency)
3) Specific projects that have the largest user or developer base(objective metric for measuring attractiveness of the project)
Well, they're not great, but I don't think most decisions
Re: (Score:3, Insightful)
Or do it the standard government way...
Most money goes to the project who offers the biggest "incentives" to whoever is responsible for making the decision.
This is a bad idea (Score:5, Funny)
FOSS software increases productivity. It reduces overhead and costs. The evolution of free software reduces the demand for programming and support labor in the long term.
This is not good for the economy. Our economy is hopelessly reliant on unskilled twits who can barely keep our infrastructure running; who spend many hours increasing the problem rather than diminishing it, and who get paid a good wage doing that so they can buy the latest Plasma TV and show off to their friends their XBox skillz in HiDef. If everybody converted to Linux and BSD in the server room, there's another quarter million MCSEs out of work. Imagine all the servers that won't need to be updated on Patch Tuesday and Surprise Thursday! It'll be utter anarchy! Some servers won't be rebooted for months.
This is bad... for Obama.
Re:This is a bad idea (Score:5, Insightful)
there's another quarter million MCSEs out of work.
Simple solution: Soylent Green.
Parent
Re: (Score:3, Interesting)
Re:This is a bad idea (Score:4, Insightful)
But you can actually *see* the open source projects that die, and potentially make use of them in the future, and if you were already using them you can continue to do so.
What about all the commercial projects that die, many of which never even reached the release stage.
One such example, is PostPath (http://www.postpath.com) which used to be advertised frequently on slashdot, they used to make a mail server which was a drop in replacement for ms exchange, while outperforming it by a huge margin... We had their demo version and very much liked it, it would have freed us from several niggles we have with exchange 2003, while costing significantly less than 2007 would while not necessarily fixing the issues we have.
However, PostPath were bought out by Cisco... Their existing mail server product is no longer available, and future versions won't be developed... The company will in the future, as part of cisco, be doing mail as a service - which is completely unacceptable for us, as we need to maintain control over our own email for legal (not to mention performance - don't want large attachments going over our slow wan link) reasons. So now what? Our planned migration had to be cancelled, had we already completed it we would have been stuck with an ageing product that would never be updated....
If it had been open source and abandoned on sourceforge, then not only would we still be able to acquire it despite the original developers having lost interest, but there would be a chance of new developers picking up the project.
If i want to create an updated version of a dead sourceforge project, i can use the existing code as a base... If i want to create a new version of a dead closed source project i have to start from scratch, and may have to spend significant time reverse engineering binary formats or such.
Parent
Open Source is Socialism (Score:4, Interesting)
Notice how open source is supposed to work the same way as scientific research does? Both of them requires socialism economics in order to work well.
Look at scientific research for example, you pour a large amount of money into it, but you can't sell the results of your research. You can only see the impact of your research, if any, a couple of years after some companies see the commercial value of your research and decided to use it.
Look at LHC for example, is there any commercial value for investing such large amount of money for the research? No. How about research on nature and species in a certain natural ecosystem? Other than probably selling the video to few people who are interested and willing to pay, I don't see much commercial value in such research.
So then think about it, why on earth can such research still exist today? If the world is under pure capitalism, nobody is going to spend any money to support these research. Instead, you need a socialism model to support the research.
The current socialism model to support research is to gather a pool of fund from a large group of people, and distribute the resource to everyone in a centralised way. Our pool of resource may be from university, which is paid by university students or sponsored by government. Or the resource may be directly from government, which acts as a pool of fund from the taxpayers.
Hence in some way, everyone in a nation contributes a tiny fraction of money to the research institution. The results of the research would then get contributed back to the society and benefits everyone.
In fact, tax is a kind of socialism that solves problem of requiring tiny fraction of resource from huge amount of people. A country with 100% socialism is just meaning a country with 100% tax.
So compare this with open source, what's the different? If you divide the cost of development with the number of people who benefit, everyone is supposed to pay a very small amount of money.
The current difficulties of open source is that there is actually no way to collect this small amount of money from everyone, and thus open source projects usually require small number of people to donate for most of the cost, while all other people becomes freeriders.
I believe that in order for open source projects to grow in a healthy way, a socialism model for open source has to be established, and we have to have a pool of fund to support the projects. And currently, the only kind of pool of fund I can think of is from the government.
Re:Open Source is Socialism (Score:5, Insightful)
Parent
Microsoft will NEVER let that happen (Score:5, Insightful)
There are no limits to what Microsoft, companies like Microsoft and their supporters would do to prevent that from happening.
I have often wondered what sort of chaos would ensue if the plight of the "big 3 auto" were shared by Microsoft. It could upset employment at all levels of the economy. The ripples of the effect would be global. But in the end, I believe people and business would simply work around the issue if Microsoft simply failed and ceased to be. I think that perhaps the overall effect would be somewhere between three and four times as annoying as the latest daylight savings time changes. But people would move off of Microsoft Windows because the platform would just be too unsafe to work with.
One way or another, people will eventually find that Microsoft isn't as "necessary" as they currently believe. Ultimately, when you break down computing and data processing to what needs they serve, it is easy to see that just about anything will do. The biggest problem is getting over people's natural fear of the unknown. Microsoft is all that most people know and so anything else is to be feared and avoided. But when shoved into the water, people will swim.
Publicly funded F/OSS software projects would show the world that Microsoft isn't as necessary as they currently believe. Microsoft would pull no stops in preventing that from happening and I would even go so far as to say they would collectively hold the value of no single life above the interests of their business and business model.
nope (Score:5, Interesting)
the savings [to consumers] in the United States alone could easily exceed the cost of supporting software development
Capitalist economics doesn't work like that. Money that consumers don't spend doesn't contribute to GDP, but money they do spend does, and GDP is the magic number (remember, we're all happier when the numbers go up).
This highlights why OSS won't be a pillar of Obama's spending spree. Microsoft sell software made by developers they pay and these developers then spend their pay on other software (say). This moves money round the economy continuously and makes the GDP look great. Paying a developer to create a free piece of software is effectively a one off payment and doesn't contribute to GDP much (it mainly increases coffee consumption), in fact all it does really is inflate government spending/borrowing.
The end result for the user is clearly better in the second case, but better for the "economy" in the first. If you want the government to choose what's better for the user at the expense of the "economy", well, I guess you'd better move to Canada or one of those other commie countries cos it won't happen in the US of A.
Re:nope (Score:5, Informative)
That's actually the broken window fallacy [wikipedia.org]. If someone breaks your window, they're helping the economy because you will then spend money to buy a new window and pay a worker to install it for you.
But actually what's happening is that resources that would go into something productive for the economy get diverted to replacing something previously existent, thus reducing economic growth.
Parent
As if the New Deal was successful, it wasn't (Score:4, Insightful)
Why all these comparisons to the New Deal? It didn't work. If it wasn't for WW2 we would never have gotten out of it. All we got in eight years was government debt and unemployment did not change. Sorry but this use it for FOSS is simply pie in the sky type crap. Why? Because those who actually implement it will not have any relation to those in the community. It will simply route money to schools, after all they can do this just fine and they need the money as well as the computers.
No, instead of spending the money by the government why not let those who actually earn it decide what to do with it? Give all those who pay income tax a tax holiday. This will do two things, one is to allow the working American to spend his money where he wants thereby focusing the bailout on businesses that matter to the earners as show them just how much a burden the government truly is.
Re:As if the New Deal was successful, it wasn't (Score:5, Insightful)
WW2 was the New Deal on steroids. The Government quite literally quadrupled spending and took full control of the economy, even to the point of regulating wages and dictating output. If you want to argue WW2 pulled the US out of the Depression, then you're just saying the New Deal was too small.
The GI Bill created the most educated workforce on the planet and paid for 60% of all University graduates. Poverty among the elderly was reduced by 80%. Home ownership and the middle class was created in just a few years from the New Deal. It was a huge success.
You're also ignoring the rest of the world. As each country implemented Keynesian policies, their economies quickly recovered. The US was just one of the last to join the party.
There are no mainstream free-market Austrian economists anymore... they died out. Even Bush's economists are New-Deal Keynesians.
Parent
The New Deal failed. (Score:5, Insightful)
WW2 was the New Deal on steroids.
WW2 was certainly a huge capital outlay, and brought people to work, but let's not forget some basic things:
a. WW2 took place 9 years after Roosevelt was elected. He had nearly a decade of New Deal to end the Depression and really didn't accomplish anything.
b. We are already in a war, two of them actually, and the economy still sucks. IF we wanted to raise the military budget to 6T a year, we would have WWII levels of spending on the military, and, what would that accomplish?
c. The prosperity of US postwar had more to do with the total destruction of American industrial rivals. Even GB, our ally, was so bankrupted by the war that she hit the skids. Continental Europe and Japan were destroyed, and the damage caused to Russia by the German invasion was so severe it doomed Russia to be a third world economy for decades afterwards. USA economy has been in relative decline as each of these players rebuilt and retooled.
You're also ignoring the rest of the world. As each country implemented Keynesian policies, their economies quickly recovered
IT was Keynesian policies they implemented, it was classic mercantilism, protecting their own industries as much as possible to let them rebuild, while selling their goods to the USA. This dysfunctional world economy has persisted for 60 years. First it depleted USA gold reserves so that in the 1970s the USA floated the dollar. Then, it depleted USA dollars so that in the 1980s the USA began borrowing, and then, when Bush finally pulls the plug on the whole damned thing by lowering the dollar, we're left with an economy that is reflective of what it really is, a large economic power with a bunch of smaller, but capable, economic powers, and a bunch of goods and a so-called free trading system that is actually irrationally priced due to the junkie's desire to keep the postwar ball rolling.
No more.
Americans aren't going to tolerate the economic dislocation and fiscal ruin caused by all the imports, and finally, you are going to have to see USA's trading partners actually construct meaningful domestic demand on their end, while at the same time the USA will have to build more of what it needs and stop treating the developing world as so much indentured servants.
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Bad example. What about the NIH? (Score:4, Insightful)
Your example is bad. A supermarket is a consumer, not a producer. Now let me give you a real example, one I know something about.
Years ago, there were many companies making marine engines. They were typically very bespoke and very expensive, and though they were very solidly built they were not terribly reliable. Then what happened was consolidation. Volume manufacturers appeared who produced limited ranges of engines that were much cheaper and, because R&D was amortised over high volume, much more reliable - companies like Kubota, Mitsubishi, Mercedes, Volvo. So the small manufacturers went bust, didn't they?
Of course not. They simply absorbed the high volume engines into their product range. They took the core engines and used their marinising parts to provide a range of options for different applications, which they could now do more cheaply. They focussed on services and added value. Because they did not have to have lots of capital tied up in core engine production, they had lower financial risk. The reduction in cost is one reason for the explosion in the powerboat market.
Same thing for software. Most small companies do not run by making core services. They survive on supplying special markets. Common core software allows them to focus their expertise on the added value in those markets. Because the vertical market software now has a lower cost basis, more people can afford it. The market grows. The company has a more diversified customer base so it has to do more customisation. This absorbs the resources that were once trying to maintain the invisible code.
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Re:2 billion? (Score:5, Insightful)
Ah, a fellow cynic. Some people just don't appreciate good sarcasm.
Yes, I could see Congressmen who dine regularly with their Microsoft lobbyist giving speeches about how excessive $2 billion would be for "hobbyists". While the (foreign) Citibank got -- $300 billion, right? To produce what?
This whole idea shows way too much pragmatic sense for 21st century America.
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