How Does a Poor Economy Affect Tech Innovation?

sshuber writes "It's no secret that the US and other parts of the world are currently having some economic problems. How is this affecting new technologies under development? With the large numbers of layoffs, are we seeing projects, such as things under R&D, that are being axed? Are companies playing it safe and sticking with what they know sells in lieu of pushing the envelope? Finally, how is this affecting the open source community, either positively or negatively?" A lot of open source work happens with the backing or at least the sufferance of corporations. Do laid-off tech workers contribute fewer cycles to open source projects, or more?

When I was looking for a job...

[Alex Belits]

...my productivity on pretty much everything taken a huge nosedive.

workers

[lupis42]

I would expect at least some laid off workers to do some open source work just to keep their skillset current.

Re:Is It Really A Poor Economy?

[ergo98]

Remember, when you (the top 5%) can't afford your second SUV for your family it usually means the rest of the world is hurting badly. I think even rural America sees things differently than you.

Aside from tremors, China is doing fantastic. India is much the same. Europe is doing pretty much the same. Russia is recovering nicely from their economic doldrums.

I would guess that there are far fewer people worldwide living in poverty today than there were 10, or even 5, years ago, despite some speculative food price run-ups.

However, disparity of wealth distribution isn't even the point in contention (no one disputes that it is a real problem). This submission is quite clearly playing upon the current "the economy is in the gutter" meme, but it just isn't supported by the numbers. Things aren't great, and there's some bouncing atop a potential recession, but it's actually remarkably robust given some of the inputs over the past couple of years, which many expected to yield much worse conditions.

Heh.

[SatanicPuppy]

So what you're saying is, either it will effect tech or it won't? You must be an economist.

The first thing you want to do when you're belt tightening is cut jobs; employees are huge overhead. But how do you cut jobs when the work still has to be done?

Answer? Automation. If you can't automate, you'll outsource, and outsourcing itself often requires new technology.

When the bubble popped, a lot of tech people took it in the shorts, and since that's the last big economic wobble, it's the one everyone is thinking about. But in reality there is no guarantee that a downturn will be bad for tech, or tech industries...It depends on what sectors experience the lowest growth. (Sadly, I do economics too.)

Re:Large numbers of layoffs?

[Lord Ender]

Employment for health care and IT is still very strong. If you were a HELOC pimp, you're in trouble; but you never really contributed anything to the economy in the first place, so count yourself lucky and go get a real job.

Re:Depends...

[Darkness404]

As much as I'd like to believe you, the train-wreck of Vista was supposed to usher in the year of the Linux desktop...

Look around you, Linux adoption is higher then ever. Ubuntu has made Linux easy, Dell has Linux installed on normal PCs (along with some other computer makers), the gPC is many times sold out at Wal-Mart, the eeePC with Linux is quite popular, and the use of Linux-based tablets such as the N800 is on the increase. Never before could you get Linux so easily, it still isn't as common to walk into a large retailer and find computers pre-installed with Linux but if you spend 5 minutes hunting around, Linux is easy to find.

Re:necessity the mother of invention

[SatanicPuppy]

Well, as to your first point, yes and no.

There is a real issue; people losing money on the stock market, people dealing with fuel and food costs, people losing money on real estate...All those things mean that there is less money running around in the economy, and less money means economic issues.

Now generally recessions are a problem of herd mentality. Plenty of people who haven't lost any money are deferring purchases because they're worried that they may lose money, and that restricts the flow of money further and effects industries that were not effected by the original troubles. It seems stupid when the government says, "Go out and spend!" but that actually has a measurable effect.

Otherwise I agree.

Re:Is It Really A Poor Economy?

[rmadmin]

Or lose their arses completely when they're feeding that record high price corn to their pigs, which are not getting that great of $$ from the market.

Re:Is It Really A Poor Economy?

[Talderas]

I like how people are saying the drop in housing prices is a terrible thing. It's immediately bad for those people wanting to sell houses, but it's a fantastic opportunity for people like me who live in apartments and may want to invest in a house.

Re:Is It Really A Poor Economy?

[jtev]

It depends on where they are, and how their crops did. In many key food production parts of the country they didn't do so good. In some they made out like bandits. That's what happens when crops fail. If your crops fail, you're screwed. if someone else's crops failed, you're in the money, because people need to get food from somewhere.

Re:necessity the mother of invention

[penguin_dance]

I think quite a LOT of this doom and gloom is coming from the media and those who want to effect a change in political parties this year. No, everything is not perfect, but it's not going down the drain either. The problem is when you have a lot of people talking down the economy, it has an effect. Every problem or belt tightening becomes another sign that the economy is going downhill.

One of the problems we're facing regarding the housing market is of our own making and the banks being able to create all kinds of ridiculous scams to otherwise qualify people that could not afford the house they were buying. Using an adjustable rate mortgage (ARM) or one of those interest only loans only works if the value of property continues to go up, as well as salaries. Eventually, however, the market corrects, the value goes down and the homeowner finds they owe more than it's worth just in time for the ARM to adjust upward. Then then owner gets fed up and walks out of the property.

We already went through a similar Savings and Loan crisis that cost taxpayer millions during the mid-80's - mid-90's when the housing market collapsed. And yet after bailing them out, nothing was put in place to make sure they couldn't invoke other predatory lending practices.

Then there are the companies who use this as an excuse to cut back. Believe it or not, I'm contracting for a large oil company who is in the process of laying staff off! I had hoped they would be hiring, but quite a few of the people I know are having to look elsewhere in the company or outside. It makes no sense with the amount of money they are no doubt pulling in right now, but it's cutting back and outsoucing.

You've hit on a very important problem

[hassanchop]

The term "poor economy" can be, and has in the past been, a self fulfilling prophecy.

If the population believes the economy is poor, and they behave as though the economy is poor, then the economy, regardless of its actual state, will, by the actions of the brainwashed masses, begin to behave as though it were poor.

That appears to be exactly what is happening here.

Re:Is It Really A Poor Economy?

[ergo98]

Half the population could be in a soup line at the homeless shelter, but all you'll see on the news is low unemployment, low interest, and high growth.

The press lives off of bad news, so if you really think that they look to play down poor economic news, you are dreaming.

Re:Is It Really A Poor Economy?

[bigstrat2003]

Having had some experience with farmers (I grew up on a dairy farm in Wisconsin), I'd say he's either a lucky farmer or a big farmer. Large-scale farms often do well (of course, they also get extra help... took my parents ages to find a plant to buy their milk who didn't offer higher prices to big farmers just because they were producing more milk, and that's not even counting the fact that big businesses in general tend to have an easier time getting breaks from the government), but the small guy is generally just getting by. Not losing money hand over fist, but not getting rich either.

Also, that guy is a corn and soybean farmer. I'm guessing ethanol might have something to do with increased demand for corn (ie: higher profits for him).

Re:Is It Really A Poor Economy?

[fishbowl]

>A recession's when your neighbor loses his job. When you lose yours, it's a depression.

If you have a neighbor, that means you're still living indoors.

Things can get worse.

Re:Depends...

[hoppo]

This is an excellent point. Any situation will bear golden opportunity for some. For every period of expansion, there will always be some period of recession that follows. During the expansion time, you see innovation in "newsworthy" areas -- new, cutting edge products that are years out from being monetized. During recession periods, the innovation shifts to less exciting areas -- efficiency improvements, etc.

Look at the paid search space. It was most likely an inevitability that the market would gravitate toward a pay-per-click model. Make no mistake about it, though -- the dot com crash greatly contributed to that industry's meteoric rise. Because of the bad taste left by the dot com bubble, ad dollars shifted to services where payment could be directly tied to performance.

Re:Is It Really A Poor Economy?

[Dragonslicer]

In the 80s in India, the situation was comparable to a rich guy having $10 and a poor guy having $9 and now, it is as if the rich guy has $1000 and the poor guy has $90. Clearly, in the second scenario, the "gap between rich and poor" is higher, but is it the worse scenario among the two I've presented?

It is the worse of the two scenarios if goods that cost $5 in the 1980's now cost more than $50.

Re:Is It Really A Poor Economy?

[Thaelon]

Two solutions:
1. Stop all this "organic" and "natural" treehuggery. Because that's all it is. Well, that and money grubbing on the part of the people selling you that overpriced stuff.
2. If you can't find enough food to eat, stop making more people. There were starving children twenty years ago. If there are starving children today in the same area, that mean somebody made more kids who should not have. Which is especially odd when you consider the fact that a woman with less than 10% body fat stops menstruating and thus stops being fertile. So staving people ought to be incapable of having children. At least women. IIRC anyway.

"Organic" and "natural" crops cannot even remotely compete [reason.com] in terms of volume of perfectly safe, edible food with the genetically modified, pest free varieties. Here's a quote:

But--to ask the organic advocates' own question--is organic agriculture sustainable over the long run? Again, the fine print says no. As their research confirms, organic farming is mining the soil of its vital minerals, particularly phosphorus and potassium. Eventually, as these minerals are used up, organic crop production will fall below its already low level. Conventional farming, on the other hand, restores mineral balances through fertilization.

Here's another gem from the same article:

The researchers also point out that "cereal crop yields in Europe typically are 60 to 70% of those under conventional management." Furthermore, they dispelled the notion that organic crops are superior food by noting, "There were minor differences between the farming systems in food quality."

Shocking to discover that fertilizer and pesticides yield more crops.

positively, I would say

[nguy]

The barristas-turned-perl-coders go back to making coffee, graduate students go back to graduate school, product cycles get longer so people have time to actually think, and investors stop throwing money at every stupid idea and actually start rewarding innovation.

A bad economy is when innovation happens.

Re:Depends...

[Darkness404]

There is no "year of the Linux desktop", there is only a gradual increase of Linux and decrease of Windows. We are seeing that happen very quickly, there won't be a sudden release of Ubuntu that makes everyone convert to Linux, but there will be a slow change to Linux and it is happening as I type this.

Re:Odd that you say that

[ergo98]

Back in 2004, I was told by a few high level realtors that interact a great deal with D.C. to sell my house as soon as possible

Wow, they got you to sell way early then, failing to capitalize on a lot of appreciation. Alas. It does take a genius to have recognized a housing bubble -- you know, pretty much everyone did, but then it's just a matter of knowing when it's going to pop. Pop!

because our interest rates were too low

They must have been drunk. Now maybe they really said that people were overextended and any rise in interest rates would threaten their buying power, reducing the prospective pool of buyers within upper purchase brackets...but that interest rates were too low? They wouldn't have said something dumb like that.

Now, I hear from Warren Buffet and Bill Gates say that we ARE in a recession against because of interst rate too low and federal deficit too high, so they are pulling out of more AMerican ventures save specialized ones, converting their dollars to Euros. THey are both investing heavily into Europe and other offshores.

Ignoring the Bill Gates thing, because you seem to have simply made that up (him being a rich guy and all...having been involved with Microsoft makes him an economics guru, right?), given that Gates has never been a financial prognosticator, and ignoring the interest rates are too low nonsense that reappears once again -- you do realize that Buffet makes his billions by *not* telling you what he's doing, right? That is his whole strategy, of trying to be ahead of the curve.

Of course, our current admin would not fudge figures or lie to us now, would they?

What's with people trying to politicize this? There are a lot of people gathering statistics and calculating the numbers, and many of them have an agenda to bring you bad news (that is their bread and butter). This continued insistence that it's all a Bush administration dupe is just bizarre.